Despite continued low investment yields and moderate economic growth in
Europe and the US, Bermuda's insurance industry continued to thrive in
2013. Gross written premium increased at a rate of 7.4% from 2009 to
2013. The growth was primarily driven by low losses from catastrophes
and proper reserve development in 2012. As a result, leading industry
participants recorded a significant improvement in combined ratio,
depicting strong underwriting performance which in turn supported their
risk-adjusted capitalization.

Key Highlights

A low regulatory burden, attractive tax environment and solid
infrastructure have been key drivers for the growth of insurance, and
also for the rise in the number of international companies in Bermuda.

The number of new insurers rose by 71% in 2013 over 2012, while the
overall number of market participants fell from 1,209 in 2012 to 1,206
in 2013.

Bermuda has evolved as an offshore financial center, due to its
minimal and liberal regulatory standards for businesses.

Growing competition is likely to have an adverse impact on the
profitability of insurers and reinsurers in 2014 and 2015, with
several operators exhibiting competitive underwriting practices.

During the review period, the frequency and magnitude of catastrophes
increased globally, leading to increased losses and placing greater
pressure on reinsurers.